RKMBs Forums .::Important::. Politics and Current Events Democrat Leaders Want Automaker Bailout

A Ford Motor Co. plant in suburban Cleveland which has been idle for nearly two years is about to begin making a new fuel-efficient engine for some of the company's 2010 model cars.

Ford has called an 11 a.m. EST Friday news conference to announce that its Cleveland Engine Plant No. 1 in suburban Brook Park, which has undergone a $55 million retooling since its last shutdown, will be the first manufacturing site to build its EcoBoost engines.

EcoBoost engines combine direct injection technology and turbo-charging for improved fuel efficiency and lower CO2 emissions. Ford says they can achieve up 20 percent better fuel and 15 percent lower CO2 emissions, compared with larger displacement engines, without sacrificing power.

The 3.5-liter, V-6 engines will be standard on the Ford Taurus SHO and optional on the Lincoln MKS and MKT, and Ford Flex cars.

"The launch of EcoBoost is the big milestone in Ford's commitment to deliver affordable fuel-efficient cars and trucks to millions of customers," said Barb Samardzich, vice president, Global Powertrain Engineering. "The EcoBoost V6 is going to achieve the fuel economy that our customers demand, while delivering even more of the performance that they want."

Cleveland Engine Plant No. 1 was Ford's first engine plant in Ohio when it opened in 1951, and has turned out more than 35 million engines in its 58-year history.

It was idled in December 2000 and reopened in May 2004 with about 800 workers after a $350 million renovation.

It was rated as capable of making up to 1,200 aluminum Duratec 30 V-6 engines per day for the 2005 Ford Five Hundred and Mercury Montego sedans and seven-passenger Ford Freestyle. But demand for the engines did not materialize as Ford expected.

The plant had more than 500 employees when it was shut down in May 2007. It was retooled to make 3.5-liter engines, but production wasn't immediately needed, and the opening date was pushed back at least twice.

Ford said it initially will use about 250 workers from its three other plants at the Cleveland-area site.

Telephone messages seeking comment were left Thursday evening for Michael Gammella, president of the United Auto Workers Local 1250 union at Brook Park, who is also the City Council president.

Telephone and e-mail messages also were left Thursday evening for Brook Park Mayor Mark Elliott.

GM and Chrysler should merge and shed all cars that aren't selling well.

General Motors made my first car. It was a 1955 two-tone Chevrolet with stick shift and black tires. It had an AM radio and air conditioning, if I hand-cranked the window down in summer. It came with bench seats, the better to have your date close to you. I bought it used (this was before cars were "pre-owned") in 1961. My Dad co-signed the $750 note, which I paid.


Those were the days when you could fill up for pocket change. Somewhere I have old Esso receipts that show a full tank of regular gas cost me $3 dollars.


Chevrolet, Buick, Pontiac and Cadillac were the mainstays of GM, as Fairlane, Crestline Skyliner, Falcon and later Galaxie were for Ford, some of which I would own as an adult. I would also own some Chrysler products, so I have contributed to the profits of all the "Big Three."


Ford is fending for itself without a bailout from Washington, but GM and Chrysler have filed their restructuring proposals with the government in order to receive additional billions to keep them solvent. On Tuesday, GM received the final $4 billion on a $13.4 billion federal commitment. Chrysler, also getting $4 billion, has already requested an additional $3 billion. The money is conditioned on GM and Chrysler coming up with comprehensive restructuring plans that will prove to the government that they have made "aggressive" progress since they pleaded with lawmakers last December for financial aid. Members of Congress told the company CEOs that everyone had to make sacrifices, including management, unions, suppliers, investors and bondholders.

Here's a better idea: Let them die a slow death, with the emphasis on slow. Tell workers (management always seems to land on its feet) that they have a fixed amount of time to look for new jobs. Government will help them with training and education, but government cannot prop up companies that no longer make products people want to buy in large enough numbers for them to remain profitable.


There are many reasons the car companies are in trouble, all of which have been reported in the major media, but that is the past and it is way too late in the game to do much about guaranteed pensions and health care that ended up crippling GM, even after the company successfully negotiated with UAW members to decrease retirement benefits, which, honestly, is a little like quitting smoking after being diagnosed with lung cancer.


Some of the cars of my childhood are no more. Kaiser-Frazier was the biggest postwar challenger to the Big Three. Models included the 1949 Kaiser Custom Vagabond, the 1948 Frazer Manhattan four-door sedan, the Dragon sedans and Henry J coupes. In 1970, Kaiser, then known as the Kaiser Jeep Corporation, was sold to American Motors Corporation.


Other auto companies either went out of business or were bought. These included Packard ("ask the man who owns one"), Studebaker ("first by far with a postwar car"), and Hudson, which began making cars in 1909 and, like other automobile companies, in early 1942 was ordered by the U.S. government to stop making passenger cars and concentrate exclusively on fulfilling war contracts. In 1954, Hudson eventually merged with Nash-Kelvinator to become American Motors, a company that lasted in one form or another until 1987 when Chrysler gobbled it up.


None of these companies (and many more before them and after with names such as Tucker, DeLorean and Duesenberg) received government bailouts. If they couldn't sell their products at a profit, they either sold out, or went bust. People who worked for them found other jobs. No one starved to death.


Americans have benefited from capitalism. Our government should not be undermining an economic system that has produced more prosperity for its citizens than any nation on earth. It cannot forever prop up companies that make products not enough people wish to buy. If a growing number of people prefer cars not produced by GM and Chrysler, how will a government rescue plan make them more likely to buy them?


The "going out of business sale" sign should go up now. Taxpayers should not be expected to underwrite dying companies, unless we get a free car for our money. But that only happens on "Oprah."

Hand Over the Keys: Top Republicans say General Motors should file for Chapter 11 bankruptcy, reorganize and demonstrate long-term plan before asking for more federal money.

Newspapers Help Obama, Obama Helps The Newspapers

• "A source of mine called to say that Obama's reached out to some newspaper publishers about giving papers a tax break in the stimulus package."
  
  Soren Dayton describes it, via Twitter: "Obama pays off his base: The media."
  
  Chip Saltsman's best moment in the RNC Chairman debate last Monday was describing our current policy shift, in which winners and losers are set by the market, to a world where winners and losers are set by President Obama, Speaker Pelosi, and Majority Leader Reid.

DETROIT – Many assembly line autoworkers reacted with skepticism and anger Monday to the Obama administration's tough tactics, which stoked long-simmering feelings that the people who put the country on wheels get treated differently than the wizards of Wall Street.

"It's the age-old Wall Street vs. Main Street smackdown again," said Brian Fredline, president of UAW Local 602 at a plant near Lansing. "You have all kinds of funding available to banks that are apparently too big to fail, but they're also too big to be responsible."

"But when it comes to auto manufacturing and middle-class jobs and people that don't matter on Wall Street, there are certainly different standards that we have to meet — higher standards — than the financials. That is a double standard that exists and it's unfair," Fredline said.

Many workers — not generally known for their affection toward executives — even sympathized with Rick Wagoner, who was forced to step down as chief executive of General Motors Corp. He was by turns called a "sacrificial lamb," "scapegoat" and "fall guy."

"We knew someone was going to have to take the proverbial `bullet,' and it would have made it a lot easier to accept that had the CEOs of the banks also been required to give up their jobs," said Jim Graham, president of a union local in Lordstown, Ohio, where GM produces the Cobalt and Pontiac G5 fuel-efficient cars.

While CEO oustings haven't been widespread among the banking industry, the government did in September reserve the right to remove senior management at American International Group Inc. as part of its agreement to give the insurer $85 billion in emergency aid. AIG Chief Executive Robert Willumstad stepped down as part of that company's bailout package, and the government hand-picked his successor.

Also, banks don't have the union and legacy costs that the automakers do, which make their products more costly versus foreign rivals.

President Barack Obama said he was "absolutely committed" to the survival of a domestic auto industry that can compete internationally. He raised the possibility of controlled bankruptcy for one or both of the troubled automakers.

Obama said the administration will offer GM "adequate working capital" during the next 60 days to produce an acceptable reorganization plan. The government gave Chrysler LLC 30 days to overcome hurdles to a merger with Fiat SpA, the Italian automaker.

Many workers say the government hasn't dictated such terms to insurance giant AIG or the banks in which it's taken an ownership stake. Obama's actions come amid public outrage over bonuses paid to business leaders and AIG executives.

"To see the very people that drove this economy into the ground be rewarded through bonuses while receiving tax dollars is just galling," said Dan Maloney, a machine repairman at auto supplier Delphi Corp.'s plant in Rochester, N.Y., and a union local president. "In light of that, the administration is taking it out, I believe, on the automotive sector."

Michigan Gov. Jennifer Granholm called Obama's moves "a bit of tough love," yet recognized a disconnect between the financial and auto industries.

"Yes, I do think that there has been a different look at those who manufacture than those who make money by flipping paper and I'm hopeful that the financial industry gets as tough a scrutiny as the auto industry has," she told reporters after an event Monday in Macomb County's Clinton Township, about 20 miles northeast of Detroit.

Despite Granholm's criticism and what many workers saw as the president's unduly harsh treatment, Obama's actions might not have a lasting effect on voters.

"It will be accepted, grudgingly perhaps, but accepted by anybody and everybody with a brain in their heads," said Bill Ballenger, editor of a Michigan political newsletter and a former Republican state lawmaker.

Still, Bill Rustem of Public Sector Consultants, a Lansing-based nonpartisan think tank, said Obama's actions carry some risk.

"I think this could have some impact four years from now if the state's economy doesn't begin to turn around," he said. Michigan's unemployment rate rose to 12 percent in February, marking the eighth straight monthly increase.

Workers watched Obama on large-screen TVs in the lobby bar of a hotel in Detroit's Renaissance Center, home to GM's headquarters. Several wearing GM badges declined to comment afterward, but one man whose fortunes are nearly as tied to GM as its employees expressed hope for the future of the company and industry.

"It's definitely a move in the right direction," said Tony Keros, who owns a restaurant and real estate development firm in the building. "Something has to happen."

In Ohio, Graham agreed that Washington just might get it right — if only because the stakes are too high to fail.

"They understand that there are literally millions of people who depend on the auto industry — whether directly or indirectly — and a ripple effect of eliminating a General Motors, Chrysler or Ford would be devastating to an economy that's already been devastated over the past eight years," he said.

In forcing the resignation of General Motors CEO Rick Wagoner, President Obama said he was seeking a fresh start, a "new vision and new direction," for the beleaguered automaker.

But some critics are questioning why the president of the United Auto Workers union didn't meet the same fate, to signal a fresh start on the other side of the bargaining table.

Even though UAW President Ron Gettelfinger argues that his workers have made significant concessions in recent years, critics say Gettelfinger should have gone the way of Wagoner -- whose ouster could be seen as the final judgment for GM's pursuit of gas-guzzling SUVs at a time when foreign manufacturers were winning over their customers with fuel-efficient cars.

"Every bad thing you can think a union can do, the United Auto Workers did," said Kevin Hassett, the director of Economic Policy Studies at the American Enterprise Institute.

Hassett said Gettelfinger presided over negotiations that kept the auto giant burdened with costly benefits programs and protected higher-paid, long-term employees from the cutbacks set in place for new workers.

In December testimony before the Senate Banking, Housing and Urban Affairs Committee, Gettelfinger defended the concessions made to date by the UAW. He pointed to a move in the 2007 contract to slash wages by half, to about $14 per hour, for new workers, and to exclude such workers from the traditional health care and pension plans.

He said recent contracts held base wages for workers through 2011, and that they accepted reductions in cost-of-living increases. Plus he noted that the jobs bank, a program that provided up to 95 percent pay for laid-off workers, had been mostly eliminated.

The government loan terms for Chrysler and GM call for the companies to reduce labor costs and for the union to exchange 50 percent of payments to the retiree health care trust fund for equity in the companies.

Brian Fredline, president of UAW Local 602 in Lansing, Mich., told FOX News that Gettelfinger should "absolutely not" be forced out.

"Rick Wagoner took one for the team, but Ron Gettelfinger as far as job performance is concerned has done nothing wrong. In fact, he's been one of the stellar leaders of the UAW," he said.

"We've already been to the negotiating table. It's a lonely place to be," Fredline said.

But analysts say Gettelfinger's concessions for new workers don't amount to much at a time when auto manufacturers are closing plants, not hiring new people.

"They actually agreed to massive concessions, but not for any of the current workers," said James Sherk, a fellow at The Heritage Foundation's Center for Data Analysis. "The union wasn't willing to push for major concessions (until 2007)."

According to a study by Sherk, GM was recently paying workers a combined total of $73 an hour, factoring in benefits like health care and pension payments. (He disputed claims from Gettelfinger that that figure includes the pension and health care costs for already-retired workers.)

That's compared with the $45-$50 an hour foreign automakers in the U.S. are paying workers, including benefits, according to Sherk. He said the contracts for new workers will bring the UAW down to the pay scale of those foreign companies, but the company is still burdened by pension and health care obligations.

Fourth quarter reports from 2008 showed that pension plans at GM were under-funded by about $12.4 billion.

The problem, Sherk said, is that Gettelfinger and his predecessors presided over contracts that set companies like GM on an unsustainable course -- a rut that's difficult to get out of at this point without bankruptcy proceedings.

"UAW was the crown jewel of the labor movement ... now it's all sort of unraveling," he said.

Analysts are quick to note that the UAW, while significant, is just one factor in the Big Three meltdown. They say the big automakers still have too many dealerships and too many bad brands -- and that the entire industry was hit by the credit crunch and overall economic turmoil.

"As long as credit is not available, people are not going to be able to buy new cars. ...
Much of the automotive situation has been a direct result of the credit market," said Dennis Virag, president of the Automotive Consulting Group. "It's not just a Big Three problem. This is a problem with all manufacturers."

Several lawmakers and union workers complained after Wagoner's ouster that the administration is treating the auto industry much more harshly than it's been treating the financial sector.

"I feel that Rick Wagoner was treated shabbily. The president's position with respect to the financial sector has been far more flexible than his approach to the automotive industry despite its far greater cost to the taxpayer," Rep. Dale Kildee, D-Mich., said in a written statement Monday.

Randy Freeman, vice president of UAW Local 652 in Michigan, blamed Wall Street for much of the economic hardship facing the auto industry -- and added that the auto workers are just a fraction of the problem in Detroit, since labor costs make up about 10 percent of total production costs.

"It's 10 percent of the problem ... the rest of the 90 percent has to be looked at also," Freeman told FOX News. "We did a lot of history-making contracts back in '07."

And Service Empoyees International Union President Andy Stern said now that Wagoner is gone, Bank of America CEO Ken Lewis should be next.

"It defies logic, common-sense and responsible governance to punish the auto industry while letting financial institutions off the hook," Stern said. "Both Rick Wagoner and Ken Lewis sunk large public companies -- putting thousands out of work and toppling the American economy -- while accepting billions in taxpayer bailouts. Yet only Wagoner got a pink slip."

As to why Gettelfinger was spared when Wagoner was sacrificed -- as Michigan Gov. Jennifer Granholm put it -- Sherk said such a move wouldn't exactly strike the populist chord Obama was looking for.

"I think it was political theater and there wouldn't be the same theatrical benefit of forcing Gettelfinger out," he said.

sped it up? i guess. seems argumentative. but, at worst, it paced it ahead by, what, 2 years? the change is inevitable, newspapers can't evolve like, say, car companies can.

for 10 years, even during stronger economies, magazines and newspapers have dipped incredibly because the internet does all they can except free and instant. and provide color, video, altering views, etc. with the net getting stronger, the print medium gets weaker. as new generations grow up without reliance on them, there's no longer a reason to keep them around.

its more generational / technological than economical

The Obama administration is seeking to ease General Motors Corp into a "controlled" bankruptcy by persuading some creditors to agree to a plan that would divide the company into two pieces, the New York Times reported on Wednesday.

Citing people briefed on the matter, the Times said the plan is to push GM into a structured bankruptcy "somewhere between a prepackaged bankruptcy and court chaos," using taxpayer financing for leverage.

The administration is drawing in part from its experience with troubled banks, seeking to create a new, healthier GM, but leaving behind its liabilities and less valuable assets, possibly for liquidation, the Times said on its website.

Under the plan, GM would file for prearranged bankruptcy, the report said, and would then use a sale authorized under Section 363 of the U.S. bankruptcy code to sell off desirable assets to a new company financed by the government.

These more valuable assets might include Cadillac and Chevrolet, as well as assets the company needs to run its business, the Times said.

Plans are still under discussion and details are subject to change, the report said.

GM officials warned on Tuesday there was a rising chance it could file for bankruptcy by June.

One plan under discussion would be to form a new company of the automaker's best assets, while laggard brands and money-losing assets would remain under bankruptcy protection, a person familiar with that strategy told Reuters.

President Barack Obama's thinking on the crisis facing GM has not changed since Monday, a senior administration official told Reuters on Tuesday.

"Nothing has changed on this," the official said when asked about a Bloomberg report that the president has determined that a prepackaged bankruptcy is the best way for GM to restructure and become competitive. "This report is not accurate."

The White House wants the 60-day period for GM and a 30-day period for Chrysler to play out, as announced by the president on Monday, the official said, speaking on condition of anonymity.

WASHINGTON (Reuters) – U.S. Treasury Secretary Timothy Geithner denied on Sunday the Obama administration was crafting bailout initiatives to allow companies to evade limits on executive pay and other restrictions imposed by Congress.

"No, that's not true," Geithner said when asked about a report in Saturday's Washington Post that the White House was trying to allow some exceptions.

"Now, our obligation is to apply the laws that Congress just passed on executive compensation and we're going to do that," he told the CBS program "Face the Nation."

"We're also going to make sure that these programs are as effective as possible in making credit more available to businesses and families across the country."

The Post said President Barack Obama's administration believes it can sidestep the rules because it has in many cases decided not to provide federal aid directly to the financial institutions, instead setting up special entities that act as middlemen to channel the funds.

Executive pay restrictions are among efforts by Congress to claw back bonuses and curb pay amid public anger over executive bonuses at insurer American International Group, which has received a bailout worth up to $180 billion.

The "Pay for Performance Act of 2009" was passed by the House of Representatives last week and now goes to the Senate.

Geithner also said the U.S. government would not hesitate to oust management of big banks that require "exceptional assistance," as it did last week with General Motors.

He noted the government had shaken up management at financial institutions Fannie Mae, Freddie Mac and AIG, "and we'll do that in the future if that is necessary."

CONDITIONS ATTACHED

Some financial firms have said the prospect of compensation limits make them reluctant to join in the Treasury's financial rescue package, which could diminish its power to cleanse toxic assets from banks' books and jump-start lending.

Obama senior adviser David Axelrod told "Fox News Sunday" the president does not want to discourage companies from participating in the Treasury programs, but has a tough set of standards on executive pay.

"On some of these programs, we're asking financial companies to come in and help solve this problem by providing more lending, by buying up toxic assets and so on," he said. "We don't want to create disincentives and undermine the program.

"So we have to look very closely at this, making sure that we're not rewarding people for irresponsibility, that people -- that firms that get extraordinary help -- aren't getting, aren't giving out huge bonuses."

Geithner said the White House was committed to enforcing the restrictions approved by Congress.

"Absolutely, because we want the American taxpayers' assistance going to generate greater lending -- not providing excess compensation," he told CBS.

"It is very important to us that every dollar of assistance we provide goes to expand lending."

So the failing auto industry needs to use bankruptcy as a means to make themselves viable yet again. Why didn't anyone think of this before?

WASHINGTON — Chrysler LLC's financial arm turned down additional government aid after some top executives refused to accept new limits on executive pay, according to a government official with knowledge of the negotiations.

The official said Monday that the Treasury Department denied Chrysler Financial's request for more aid because some of its top 25 executives would not waive their rights to legal claims against the government and Chrysler Financial regarding new caps on executive compensation. The official did not want to be identified because the decision has not been made public.

The Washington Post reported on its Web site Monday that Chrysler Financial turned down $750 million in aid on top of $1.5 billion it already has received.

Chrysler Financial denied the allegation. It issued a statement saying it has enough private capital to meet its short-term needs of lending money to dealers and customers, and it doesn't need more money now from the government's Troubled Asset Relief Program, or TARP.

Chrysler Financial received a $1.5 billion loan from the bank bailout program in January and said it would use the money to provide low-rate financing to more car buyers.

The government also restricted executive pay for federal bailout recipients at that time, but the restrictions have gotten tougher since then.

"Executives have not been presented with any new demands with regard to executive compensation. As a TARP recipient, the company remains in full compliance with current executive compensation requirements," Chrysler Financial's statement said.

The federal loan Chrysler Financial received is separate from the $4 billion the government has lent to Chrysler LLC to aid the Auburn Hills, Mich., automaker's struggling manufacturing operations. Chrysler LLC faces an April 30 deadline to restructure and ink an alliance deal with Italy's Fiat Group SpA or it won't get any more government loans.

A spokeswoman for the Treasury Department's auto task force, which is handling the Chrysler and GM restructuring plans, said it was monitoring the financing situations for both Chrysler and GM as part of talks over the future of the two automakers.